Risk management thoughts in the current pandemic
It’s entirely appropriate in these times of uncertainty that organisations are solely focused on the response to the unprecedented impact and consequences of the coronavirus. As businesses takes the necessary steps to scale back or, in some cases, shut down their operation (assets; resources; various management systems and processes) risk managers should remain aware of the existence of other risks and hazards that may arise as a consequence. Now more than ever risk managers have a critical role in advising the business on the pressures created by a dynamically changing risk environment.
Below are a few pointers on themes to consider:
Risk context & appetite
Given the current situation is already global, our internationally connected world of supply chains and territorially dispersed operations means that responses will have to vary regionally and nationally. John Hopkins University is a reputable provider of data relating to coronavirus regional confirmed infections, fatality and recovery variations. Their real-time tracking map can be monitored here: https://coronavirus.jhu.edu/map.html Your ability to respond in future, eventually recovering as the pandemic eases, will require a geographically phased approach to both scaling back and then subsequent recovery.
While the situation remains fluid and changes rapidly by the day, immediate risk management activities are focused on protecting the business from the effects of the pandemic and consequent reduction in demand. It is important to remain abreast of the latest developments globally, regionally, nationally and locally which will inform your organisational context and risk appetite. Risk appetite is the level of risk that an organisation is prepared to accept in pursuit of its objectives, before action is deemed necessary to reduce the risk. Has that been impacted by the changes to the context in which the organisation now operates?
Emerging and remaining risks
New risks may emerge as a result the changes to your organisational context and operational circumstances. In addition, during the period that your focus is on the response efforts to the immediate impact of the pandemic, any consequent reduction in capacity, resources, equipment, facilities, business assurance and environment will not necessarily eliminate risks. Some will remain regardless of the new size and scale of your operation.
While the organisation is facing up to rapidly re-sizing to meet the changed context, organisational assurance processes are likely to be diminished meaning processes for detection of deviation may go unchecked. Aligning available resources to a dispersed or remote operating model, while maintaining levels of productivity and output, will challenge the resilience of existing controls. Your public-facing systems may also be vulnerable to cyber-attack.
Supply chain resilience
Ensure communications and shared information channels remain open with key suppliers, including your plan for reduced operations. Lack of initial co-ordination could inhibit subsequent rapid recovery, if required in future.
Continue to liaise and/or collaborate with key stakeholders especially those who will have temporary control/responsibility for risk management of your assets during any “lockdown”. Share all information in an honest, consistent, and timely manner.
During this time of extreme uncertainty, your people are likely to put a significant premium on their own health and wellbeing and that of their loved ones. As the severity and duration of this pandemic becomes clearer over time, your people will place a higher value on organisational resilience, empathy for their work-life balance and a system that acknowledges and rewards their individual contribution. This is a foreseeable consequence of our current more dispersed, remote operating model.
Brett Dorney, Director, Aretai Risk Management Consulting
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